Retirement, Investments, & Insurance for Individuals Build your knowledge How to catch up on retirement savings when your earnings are down

How to catch up on retirement savings when your earnings are down

Maybe you left the workforce. Maybe you’re in an earnings lull. We know looking at account balances can be stressful in a time like this. But we’re here to help you make a plan to—in the long run—retire with confidence.

Woman working on personal laptop and paperwork at dining table.
6 min read |

1. Preserve the retirement savings you already have.

Try to leave the retirement savings you already have untouched. You may not be adding to those accounts, but they’ll still have an opportunity to grow. That may mean looking at the money you have coming in and going out and making some adjustments. Use this checklist to organize your thoughts and next steps after a financial setback.

Even over short periods of time, your existing retirement accounts may grow without any additions from you.

Here's one hypothetical example.

Starting retirement account balance


Workforce break:
3 years

Assumed rate of return:

Retirement account balance after 3 years


For illustrative purposes only.

2. Work a little longer.

Have you set a firm retirement date? Being willing to work a little longer—even part time—can be key to making up for any lost retirement savings.

Another perk of delaying retirement a few years? You’ll get a boost in Social Security benefits. While you can start receiving benefits at age 62, you’ll receive up to 30% more if you wait until your full retirement age of 66 or 67. If you wait even longer, the benefits will be even higher.

3. Work backward from your goal.

Say you’re committed to retiring at 66—no ifs, ands, or buts. Your challenge as you reenter the workforce or start earning more, says Heather Winston, financial professional and product director for Retirement and Income Solutions at Principal®, is to map out and meet your ideal savings rate.

“If you know you have a set number of years to work, you can go backward to figure out how much to save to close the gap between your goal and reality,” says Winston. “Then it’s a prioritization exercise: What are you willing to give up now so you can get there?” A financial professional can help ensure your priorities align with your plans.

4. Reprioritize your retirement must-haves.

Let’s say you dreamed about retiring somewhere that’s warm year-round—like Phoenix. But the housing market in Arizona has you questioning whether that’s realistic.

Then the question is: What’s the balance you’re willing to strike between your savings and your dream? Are you willing to work longer, save more aggressively, choose a smaller property, or find a less expensive market to live in?

“Sometimes our vision and reality aren’t aligned. But no matter who you are, how much you have saved, or what your dream is, there are ways to make it come to life. Every decision point has tradeoffs,” Winston says.

5. Continue to save, if you can.

Even when money is tight, saving is an important component of a budget.

After all, we’re living longer. About 50% of men and women age 65 will live another 20 years.

“The overarching goal is to save as much as you can, in as many ways as you can, so you can make the most of your years in retirement,” Winston says. One way is to contribute to an individual retirement account (IRA). Savings and brokerage accounts are also options.

Maybe you can add to an IRA one month but not the next. That’s OK. “It doesn’t have to be an all-or-nothing approach,” Winston says.

3 common DIY strategies for retirement savings
4% rule Divide your yearly retirement income goal by 4% to get your total retirement savings needed.
80% rule Aim to save 80% of your pre-retirement income per year of retirement.
15% rule Save this percentage of your pre-tax income in retirement accounts.

6. Make catch-up contributions.

Nearly every type of retirement savings account has yearly contribution limits, which can cause worries if you’re approaching retirement age and want to make up lost ground. Luckily, catch-up contributions can help. They’re designed for people age 50 and older and allow you to stash away an additional $7,500 in a 401(k) account or an additional $1,000 in an IRA, per year, beyond the general limits. Read more about how catch-up contributions work.

What’s next?

How are you progressing toward your retirement goals? Log in to to see how you’re doing. Want to save outside of a workplace 401(k)? We can help you set up your own retirement savings with an IRA or Roth IRA account.